Monday 1 October 2012

Now Is The Winter Of Our Discontent?

The bad news keeps coming.  The figures for Japan, one of the motors of the world economy are not looking good despite all the many and various measures they have taken. 

Russia, after an election where many promises were made, is finding that the taxes and revenues do not match the spending and so there is a budget problem.  The President is unlikely to strip to the waist for this sort of heavy lifting; it is likely that other forms of stripping will be in progress, foreign nations beware.

China’s economy is alleged to have stalled.  But China never “stalls” it keeps moving.  It is the change in direction and the overall impact we all have to worry about.  The role of China in world finance and the economy is that if China sneezes we could all catch pneumonia.

There is ample information of the travails in the Euro Zone.  Greece, Ireland, Portugal, Italy, Spain in real trouble with its zombie banks leading to a zombie economy and some twitching going on in a number of other countries.  Who is next?

France, having foresworn Austerity, just, at its recent election is about to receive both Austerity and increased spending.  How this will work is not clear.  It is proposed to finance this from the rich.  Unluckily, most of the rich are long gone courtesy of all those private banks in The City, Monaco and Switzerland.  The rest will be joining them.

In the USA there is an election going on where the incumbent President is throwing money and promises around to secure re-election.  His opponent is promising to dismantle government to save the nation.  Whoever wins will do what they are told by the Federal Reserve and their financial friends.  Did someone mention an impending fiscal cliff?

In the Middle East what was supposed to be an Arab Spring is looking more like an Arab Winter following some very unpleasant Autumns.  Unpredictable is the word to describe the future.  What is predictable is that the USA and the UK can say goodbye to any real influence.  In Libya, apparently the murderer of the US Ambassador’s dreadful death was wearing a Manchester United shirt.  I wonder if he has a season ticket?  Was he trained by UK Special Forces? 

In the UK recent governments have welcomed the Chinese and Gulf takeovers of much of our economy.  The Gulf States are in possession of a good deal of our commercial property as well as football clubs.  Also, Russian money, together with other flight money from Greece and elsewhere has been fuelling the sharp rise in London property values, underpinning the value of the pound sterling. 

This seems to be stalling.  Unluckily, ownership of much of this property can no longer be traced; having gone to secret tax havens, so neither the property nor the owners can be taxed in any way.

Across the UK there are shrieks about government cuts.  A few people who actually look at the figures keep trying to tell us without success that these are simply adjustments because government spending continues to rise inexorably along with the debt liabilities.  Our National Health Service has become a free for all International Health Service and we wonder why it costs so much.

The UK, also, is facing a fiscal cliff and looks like taking the jump off it and hope for the best option rather than others.  Whether this is because we share so much of the USA’s financial system is an interesting question.  Wile E. Coyote may have survived in the “Roadrunner” cartoons but we may find out that cartoons do not match reality despite what our main media claims.

In more practical matters today is the 1st October.  Autumn is here with Winter to follow.  If there are some bad spells of weather in Europe it could be very difficult.  There is a serious risk of major energy supply disruption in both Germany, the motor of Europe and in the UK.

For those who watch the markets the thing to watch out for is whose currency hits trouble and who will be next over the fiscal cliff.  Don’t place any bets the odds are far too short

Meanwhile there is still Afghanistan.

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